Why your company may not need social media

One of the myths we recently discussed on {grow} was the claim that every business needs to use social media in its marketing strategy.

So what determines if the social web can be used effectively in any company? One key is industry structure.

Marketers are actually quite limited in the number of options they have based on the competitive structure of their industry. Social media is just one marketing channel, and its opportunity for use will be determined by the marketplace, not the hype you read on the Internet!

To illustrate this concept, let’s look at how four companies — with four very different competitive structures — may or may not use the social web to sell the very same product: cinnamon rolls.

The Flat Rock Village Bakery is a small, family-owned cafe that serves its customers wood-fired pizzas and artisan pastries. They have a single location in a tiny mountain town. Why would somebody buy a cinnamon roll from this bakery?

Convenience of central location amid relatively little competition

Ambiance of tree-lined community setting

Community involvement and reputation of the company

Consistent quality of artisan products

Appeal of non-chain, local ownership

Attentive Service

As a marketer, we want to increase sales by promoting these points of differentiation. The social web can certainly enhance the reputation of the bakery but probably won’t significantly drive more traffic to this store — They essentially already have a captive audience. Their focus should be on increasing sales per customer at the actual point of purchase. What is their risk of NOT participating in the social web? Low.

Now compare that to a national bakery like McKee Foods whose Little Debbie brand is found in grocery and convenience stores throughout the country. Little Debbie will sell you a cinnamon roll based on

Low price, which is enabled by efficient operations and distribution

Large selection of products in a grocery store aisle

Coupons and promotions

Brand awareness

Consistent, but low-quality, product with a relatively long shelf life

Unlike the cozy competitive climate of the Flat Rock Bakery, competition in the grocery aisle is fierce and Little Debbie would ignore the social web to its peril. The bakery giant can certainly use social media to:

Monitor customer conversations about its products

Build brand awareness cost-effectively

Coupons and promotions

Involve consumers in its brand

Create new products

Facilitate customer service

Monitor competitor activities

Can you begin to see how these dramatically different competitive structures influence marketing strategy?

Although Cinnabon also serves up cinnamon rolls — in fact that is basically ALL it sells — it represents a radically different competitive dynamic.

Cinnabon bases their competitive advantage on one thing — location — and the opportunity to sell you through an impulse buy. They are usually located in malls and airports so if you are hungering for a fresh-baked goodie, you really have no choice.

Their price point is set high, and they don’t need to use coupons or other promotions because they’ve got you right where they want you – captive.

They have a Facebook page and a Twitter account but is this where they should spend their primary marketing effort? No. As a marketer I would probably spend money on fans to blow the heavenly cinnamon smell out onto the airport concourse!

Putting this to use for your business

Obviously in the space of a short blog post I had to do a simplistic comparison to make a point. I realize the industry structures are more complex than what I present here. Still, I think it’s a useful example illustrating the widely different dynamics in selling even a simple product like a pastry.

Where do you go with this as you make your decisions about social media?

Begin with the fundamentals including market research, customer interviews and competitor analysis before jumping into any marketing initiative. Spending money without knowing the competitive structure of your industry will create disastrous results.

Use clear-eyed intellectual honesty when assessing the social media opportunities for your company. There is a natural tendency to want to climb onboard Facebook or YouTube because everyone else is … but take a hard look at what effort is going to be the most effective use of your resources.

Look for channels that allow you to emphasize your competitive advantages and how they match customer needs.

Measure every effort to constantly adjust your efforts to the changing marketplace.

What is the competitive structure of your business? How many “stars” would you give your social media opportunity and why?

Jim LeBlanc

An epic post. This is great stuff and very creative and thought-provoking. Most important, it makes damn good sense. You are the “good sense blogger” my friend. Thanks!

Mark

@Jim — Thank you sir!

http://www.m4bmarketing.com Susan Oakes

Mark,

This post should be read by many small businesses I know. The pity is most do not do the fundamentals and just jump from the lastest must do to the next.

People may disagree with me but the basics of marketing haven’t changed and unless you really understand your customers, market and competitors then it is a game of hit and miss.

Perhaps it is a case that businesses do not know how to do the fundamentals in the first place so they are more easily influenced by others talking up social media.

Mark W. Schaefer

@Susan — I completely agree with you. The fundamentals have not changed, although some of the tools are radically new and wonderful. Many businesses don’t get that, which is why you and I should be in such great demand : ) Thanks for your comment, Susan!

http://bcroke.wordpress.com Brandon Croke

Mark, how can I ever thank you for writing this post?

I see (and have worked with) so many companies who run around in the social space with their proverbial head cut off.

This post provides a great perspective for anyone looking to make a smart social marketing decision for their brand or business.

Mark

@Brandon — You are too kind. Thanks so much for taking the time to let me know you liked the article Brandon!

http://www.debaillon.com Thierry de Baillon

Great points, Mark.
I would add a single point which might (maybe) help considering your great examples under a different angle: is your company trying to leverage a brand, or is it trying to produce and sell products as a commodity (which is OK anyway)? Looking ate the answer to this simple question sets the path to the need, or not, of a real customer-centric strategy, with the use of social media tactics.
Cheers,
Thierry

Mark W. Schaefer

@Thierry — Very good point. Not the only consideration, but a strong one. Like you, I have yet to see an example of a true commodity being helped in any through the social web!

http://blog.golden-tech.com/ Finn @ Golden Tech in Northwest Indiana

Though I’d agree there are markets that would probably not benefit from Social Media, those examples are more often found in Business to Business markets: a steel contractor, logistics providers…

In the end, Social Media, if nothing else, has become communication tools.

The Flat Rock Bakery – a way to communicate with the Vacationers who come to the area once a year. As well as hitting incoming vacationers.

Cinnabon – break it down to the franchise owner level, and now they have voices to compete with all the other niche food stands, and get straight to the teenagers cell phones.

The idea is there. Good thoughts, though.

http://occamsrazr.com Ike

Mark, there’s also a great opportunity for hair salons to step up and show how it’s done: http://ike4.me/o110

http://www.jonbuscall.com Jon Buscall

Flat Rock could add an additional income stream by running a twitter account driving people to a blog with feedback from the bakery as well as pics of Bob and Joe who stopped in on their way back from their holiday.

Then tie this in with a free EBook of tasty snacks to buy at home.
A video or two of how to make something shot on a Flip.
And then offer a premium service of downloads to recipes, cookbook, baking tutorials.

Isn’t this how small businesses can use the Net (and social media) to introduce new income streams?

Mark

@Jon — One of the things I hoped would happen with this post is that people would suggest new marketing ideas and applications, so this is great. Certainly your ideas are viable but here is something to think about.

What if somebody suggested to me that I should start a bakery in Flat Rock as a natural extention of my current business? Since I can barely make toast, this would seem like an unlikely buisness proposition!

So how is it different to suggest to a bakery that they should start a new business venture as a multi-media publisher? The idea that somebody who is a passionate baker could also quite naturally succeed as an effective video producer could be as far-fetched as me whipping up your morning scones.

One danger I see is that we expect businesses to naturally migrate to online publishing because it seems so easy to us. It’s not easy and furthermore it’s getting harder with increasing pressure for excellent contant and production values.

So one alternative would be for Flat Rock to hire these services out. Would that really be the most effcient use of their marketing dollars?

I appreciate the opportunity for a lively discusssion like this!

@Finn — Great ideas as well.

@Ike – YThanks for the contribution today.

http://blog.golden-tech.com/ finn @ Golden Tech in Northwest Indiana

You make “multi-media publisher” sound as if the name is in lights on the Vegas Strip. They’re tools. No more, no less.

I wouldn’t suggest them trying to speak at SXSW – unless they’re ready – but I would suggest to the Flat Rock bakery to market and communicate with their customers. Much like in the days of yore when the the milkman left a card on the front stoop while switching out the bottles or how the local deli would take pictures of their customers when they ordered for the first time, using social media is about being be social. It isn’t about the widgety php scripts with the light color & rounded corners design. It’s about being able to interact with customers in the mediums where they now spend more of their time – on their computers, cell phones, on Facebook, even breaking it down and newsletters in emails.

I think even Flat Rock, North Carolina has the “internets” now.

The technology has caught back up to the marketplace.

I’ll make you a bet: I can barely make toast, but if you and I started a competing bakery in Flat Rock, North Carolina and I use social media and you don’t, you’ll be packing up shop before I will.

And then’ll we’ll be going down to the original Flat Rock Bakery, nibbling on fresh-baked bread and getting our picture taken for being first time visitors.

@Mark, Thanks for throwing down the gauntlet ! This is an important issue to raise: just because “we” get it, it doesn’t mean that the bakers in Flat Rock would get it.

One route would be to hire an external content provider to produce some of the material I mentioned in my first response. But of course, the initial outlay might be too expensive.

An alternative route would be to hire a virual assistant with some blogging and media skills and use them to get you to second base. I’d recommend going through a service like Contemporary VA rather than just hiring anyone on Elance. At least that way you’d get the guarantee they were on the ball.

If together with the VA Flat Rock are beginning to see some success, more resources could be put into the project by brining in a professional content provider to produce a kick-ass video or three, Ebook, etc.

Mark

@Finn — I love that feisty challenge!! And oh, that would be a fun and interesting competition. But I would win. Here’s why.

First, I agree with you that the social web can be used on many levels. My comment was specifically back to Jon, who was suggesting a route that would require some better production values.

Now back to you. Here is my question: Since the Flat Rock Bakery is the only game in town, why would the social web be your first choice for marketing ahead of pushing more at the point of sale?

Instead of forcing a channel on them, let’s take a clear-eyed view of classic marketing approaches that will really make money with the customers they have in town. Remember, our goal is simply to sell more stuff to more people, more often for more money:

PRODUCT: Many of its customers are tourists ready to spend the afternoon hiking and enjoying the natural sites of the area. When they come in for their morning coffee, why not also sell them a gourmet boxed lunch for their hike?

PROMOTION: Offer free coffee coupons at local inns that are nearby but not necessarily in the traditional range of their current customers.

ADJACENCY: Their bakery is on a popular bike route. Why not offer items like energy bars and drinks that would appeal to cyclists? Why not create a safe parking area for bikes?

I’m guessing a combination of some of these ideas could increase their sales by 25% with little or no capital expenditure. Could you do that with a campaign on the social web?

I believe any of these ideas would have a bigger, quicker impact than working Twitter or Facebook. I’m NOT saying some social media effort is not possible, of course it is. But it may not be the best choice for a small business owner with limited resources.

And that’s why I think I would win! : )

I really appreciate the way you’re pushing our thinking Finn! Thanks!

Mark

@Jon — I think these are good ideas after some of the low-hanging fruit I suggested above are already plucked. : )

http://spinsucks.com Gini Dietrich

As usual, a brilliant post. Although, I have to admit I thought you were going to moon us or something…nice play on words!

I really like the stars you use to illustrate the fact that some retailers have more social media opportunity. I’m trying to decide if I disagree with you about Cinnabon, though. I think there is a pretty big opportunity for them to do location-based social media, once you check into an airport. It’s hard enough to resist the smell when you walk by…if they sent me a “did you know our cinnastix have only 100 calories” message, I’d be there in a heart beat.

Mark

@Gini — I was actually in an airport yesterday, danced my way past the Cinnabon and had the same thought about location-based apps. That is of course if somebody is brave enough to admit they are the mayor of a cinnamon bun place!

Thanks so much for your comment!

http://michelletripp.com Michelle Tripp

Another thing to add to the debate is the need to take a comprehensive look at a business, its ownership, and its long-term goals before concluding that social media shouldn’t be a priority.

Using your Flat Rock bakery as an example, the first order of business is to understand what’s going on at a deeper level. Is the baker a stand-out talent with a dream of competing on Food Network and eventually creating a franchise, or turning a favorite recipe into a consumer product? Does the owner have a passion for teaching the craft and an interest in doing YouTube demonstrations and paid classes? Or maybe they dream of writing recipe books. In today’s world, these are all possibilities for anyone with heart, energy, and talent. No matter how small they’re starting or where they’re located.

I’ve learned to never underestimate the potential of any organization, person, company, or brand. So many times business owners and managers underestimate their own worth and potential because they’re so busy with day-to-day operations they forget why they got into business in the first place, and haven’t asked themselves what will give them true fulfillment and success.

If the proprietor in question wants a quiet, peaceful life, uses the bakery as a way to make ends meet, and plans to sell it at retirement… that requires one set of strategies. But if the proprietor sees a brighter, more active picture and wants to build a brand that expresses their passions and leaves a legacy, the strategies to make that happen are going to look a lot different.

I wouldn’t write off social media for any business. But I wouldn’t walk in the door planning to try to sell it, either. The only way to know what’s right for an individual company is to ask questions and get a deeper understanding of all the factors in play before getting anywhere near talk of social media, or any other marketing tactic for that matter.

http://blog.golden-tech.com/ finn @ Golden Tech in Northwest Indiana

@Mark – Ahhh, see, you presume that Social Media would be the thing I’d use first. It wouldn’t be. I just said I’d use social media. But like with email, print, blogging, and good ole’ fashioned handshaking and glad-handing, I’d definitely have Social Media in the arsenal.

Hint: I’d probably start with a taste test. And promote with everything I got – including social media.

Mark

@Michelle — I absolutely agree which is why I was careful to state that any work needs to “Begin with the fundamentals including market research, customer interviews and competitor analysis.”

You make a very good point about the aspirations of the owners, too. I should have started the post with, “all things being equal…” : )

… and honestly can’t think of a play for social media in this environment. That would be an exception, at least I think!

Very, very good points! Thank you Michelle!

Mark

@Finn Thanks for the clarification. I had interpreted your marketing duel to mean that you would use SM and I would use other marketing methods in our face-off. Now that you agree that Sm would not be the first ting you use, I think we actually agree. I never said NOT to use SM (I gave them two stars). I just suggested that it would not be the priority if you have limited time and funds … and generally every small business has limited time and funds!

Thanks for your interesting contributions on this topic! I love mixing it up like this : )

http://mikepascucci.com Mike P

Mark,
What every company does “need” is information and research before they get involved. Social is another avenue to reach an audience, but if you do not know where they are, or how to engage with them, then you and your initiative are SOL. Also Social means so many things to so many people, that choosing the appropriate channels, (Twitter, Facebook, 4Square, Blogs, forums, wiki…) is also necessary. But the fact of the matter is that businesses do “need” to get involved in some way/shape/form. Just be careful as to which path that you choose.

Mike P, Social Strategist, Ektron

Mark

@Mike — This is an honest question — I’m not being flippant. Imagine yourself as the proprietor of a one-location bakery in a remote mountain village (with limited cell phone access BTW). You have no competitors. Your customers are largely a handful of “regulars” and some transient tourists who might visit once a year.

Realistically, how would you use social media to “listen” and conduct research? Why wouldn’t you just sit down over coffee and chat with a few customers every day?

http://mikepascucci.com Mike P

Mark,
I did not meant to insinuate that you were being flippant by any means! I am a good guy really Sorry for that.
You can not beat the face to face interactions that you have with your current audience/customers and that generally goes further than any other initiatives that you put forth. As I try to tell other, retention will bring organic growth in any business. It just takes a little more time, andno one wahts to hear that at the moment, they are looking for immediate results.

Because of the interaction and the search that the local business had on twitter, we were able to communicate with one another. Now it has not directly led to sales, but if I am in that area, I will stop by. And because of the interaction that I had with that specific business, I blogged about it, and others have read about it. Indirectly, that small coffee shop may eventually see some benefits from 1 simple interaction.

Maybe this is the exception to the rule, or maybe it is not. I am not too sure.

Mike
@mikepascucci

Mark

Sorry for the mis-communication. I was trying to say that I wasn’t being flippant with my question … was not implying anything about you at all. Your statements were fair. No problems at all. Thanks for being patient with me and thanks for your input today.

http://www.lauraclick.com Laura Click

This is an EXCELLENT post, Mark, and the discussion is even better. Thanks for sharing your insight and starting this spirited debate. I had this topic on my list of posts to write for some time – now, I don’t need to write it because you did it so well!

I love the debate between you and @Finn – I think this brings up some excellent points. Social media CAN indeed be useful to local small businesses, however, in many instances, it shouldn’t be the first tactic to employ. You’re right – small businesses often have limited time and resources. While many argue that social media is cheap/free, they forget to count the cost of time. If a small business, especially one like Flat Rocks Bakery, has limited time and resources, social media may not be the best way to spend your time. While social media can definitely be useful, there are other strategies that would be more cost effective and time efficient that would ultimately make a bigger impact on the bottom line.
Unfortunately, the web is saturated with so many posts saying “you MUST use social media” without offering the caveat that it’s not for everyone or every business. While it can be a very useful tactic, it’s certainly not the only, or in some cases, the best way to reach your customers or audience.

Great stuff!

Mark

@Laura — Well, I’m so glad I beat you to the punch : ) Thanks so very much for taking the time to comment today. It means a lot!

Love Michelle’s description of a basic content strategy. Everyone (every business) has a compelling story, but some are more compelling that others. Geographically isolated locations are just a shipping solution and a great narrative away from bigger things.

Mark

Thanks for adding your perspective, Kevin!

http://ssaxby.prblogs.org Saxby

Firsyt time I have totally disagreed with a blog post! I believe that social media can be scaled back and utilised for just about anything anyone.

You don’t have to spend big on social media. Most business owners have the internet and a facebook account at home. All it takes is a little training of your staff, a few account creations, some innovative strategies and you have a low cost (time consuming unless delegated) way to drive sales and brand awareness.

@Saxby — In all due respect, perhaps you did not read the post carefully. Undoubtedly social media can be “made” to work anywhere and even provide some value. This post looks at cases when it might not be a priority, based on the market and competitive conditions. Just marketing basics. It’s like saying any business can benefti from radio advertising. Yeah, sure they could. But is that necessarily the best choice? Of course not.

I have featured many case studies on this blog noting social media successes of both big and small companies. This post of just this week was one of the best I think: http://ht.ly/2yhgm

Certainly I do not need to be convinced that social media can work for small business. I am a living example of that, having built a very successful business with zero cash expenditures on advertising.

Perhaps we will agree to disagree but I think rational assessment would prove that social media may not be the FIRST CHOICE of a marketing channel for some, perhaps many, businesses. Thanks for contributing your perspective!

http://www.idsolutions.net.au Shop Designer Brisbane

Hi, I found your blog and
read a couple of the posts here. I’ve to say that your blog post are very
informative. Your blog have benefited me in many ways and I want to say thank
you! I will be comming back often.

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